Siemens AG has decided to expand its presence in India by setting up a centre of excellence for handling of high voltage direct current (HVDC) projects globally.
Siemens Limited which is a subsidiary of Siemens AG had gross sales of Rs 10,834 m
and net profits of Rs 351m for the financial year ended 30-9-99. Siemens Ltd. manufactures automation systems, components, medical equipment, motors and driver, power generating equipment and switchgears.
The company which had posted huge losses of Rs 1,556 m and Rs 560 m for the years ended 30-9-97 and 30-9-98 has turned around with a neat recovery. The company primarily incurred losses on account of its premature expansion into the field of telecommunicaions.
As a result of hiving off the telecom sector and cost reduction measures such as retrenchment, sale of surplus land to reduce interest burden, the company has posted profits.
The present move is a fallout of Siemens bagging a 8,200 m HVDC contract from Power Grid. The contract is essentially to transfer 2000 MW of power over 1,400 kms from Orissa to Karnataka. It is the second largest contract of its nature in the world. Only Siemens which has the cutting edge technology in this area of HVDC is expected to further optimise costs and performance by setting up such centres.
With the liberalisation of the economy and privatisation of the power sector, more and more independent power producers are entering the power sector. The crying need of the hour for overall economic development is improvement of the infrastructure of which power is the cornerstone. With the country slated for a 12% industrial growth, supply of power would be of utmost essence as there is huge gap between demand and supply of power.
The present project which would involve transmission and distribution of power from surplus Orissa to deficient Karnataka (which is the IT Capital of India) is just one of the several such projects in India.
Siemens which has acquired the cutting edge in power technology by dint of its well equipped research and development unit as well as technical knowhow obtained from its parent company is bound to benefit tremendously in terms of sales and profits by virtue of such contracts.
The only pitfalls the company must be beware of are any incidence of cost escalation and delay in payments that are typical of government agencies. Of course the company can insist on guarantees, counter guarantees and creation of escrow accounts for the same.
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